Periodic Reviews Help Keep You on Track for Your Financial Goals

Just because you have all your finances in order now doesn’t mean you can sit back and ignore your financial health indefinitely. It’s a good idea to re-evaluate and rebalance your financial life on a regular basis.

A 4-point investment review

Here are some important things to evaluate every year:

Your mind-set

Your investment returns

Compare and monitor your investment performance to other similar investments. Three popular indexes are the S&P 500 Index1 (large company stock index), Russell 2000 Index2 (small company stock index) and Wilshire 5000 Equity Index3 (large and small company stock index).

When reviewing market index performance using this method, you still have to keep in mind that:

Market indexes are not managed, so they do not reflect the deduction of any investment fees or expenses

Market indexes are not investments you can purchase or invest in

Market index performance is no indicator of how your individual investments performed in the past or how they will perform in the future

Most investments will have down years now and then, so look at your investments’ returns over multiple years

Your investments’ styles

Read the prospectuses or other reports for your investments to make sure their investment approach remain consistent with yours.

Your asset allocation

This is the mix of your investments among investment categories such as stocks, bonds and cash equivalent investments. The mix can change over time, depending on each investment’s performance. When one category performs better than others, its assets grow at a faster rate, resulting in a higher percentage of assets allocated to that category. When this happens, you might want to shift your investments among the categories to return to your earlier preferred investment mix.

Asset allocation is an investment strategy to help you diversify your portfolio and mitigate investment risk. It does not guarantee a profit or protect against loss in a declining market.

An annual financial checkup

Conduct an annual financial checkup once a year, usually at year-end. With all of your account statements and financial records on hand, you’ll have a clearer and more complete view of your financial picture.

It’s also a good idea to evaluate your financial situation whenever key events occur in your life, such as getting married or divorced, having children, starting a business, receiving an inheritance or getting ready for retirement.

Your goal is to get an accurate view of your financial situation and any gaps that might exist. Knowing where your money is now and where you want it to go will help show you how much you'll need for the future.

[1] The Standard & Poor’s Index is an unmanaged index of 500 widely held stocks of large U.S. companies that gives a broad look at how the stock prices of large U.S. companies have performed.

[2] The Russell 2000 Index is an unmanaged index of approximately 2,000 companies with small market capitalizations relative to the market capitalizations of other U.S. companies. Small company underlying funds involve increased risk and volatility.

[3] The Wilshire 5000 Index is an unmanaged index that measures the performance of all U.S.-headquartered equity securities with readily available price data.